With French mortgage rates reaching all-time lows, 2017 could be the perfect time to refinance a euro denominated mortgage loan.
We are pleased to provide you with a few simple guidelines to determine whether it makes financial sense to explore re-mortgage options.
1.If you own a French property worth more than €1 million and your interest-only credit line has switched to capital repayment, you should explore options to move to a new provider offering an interest-only facility. Carrying a debt secured against your French real estate assets is an efficient way to reduce your exposure to Wealth tax (ISF), hence why it is generally unwise to amortise your debt.
2. Remortgage if you can minimise your total cost of borrowing. To do so, it is important to look beyond interest rates and factor all costs associated with refinancing a debt secured against a property (legal fees, early repayment charges and administrative costs)
As a rule of thumb, re-mortgaging will make sense and will save you money if: - The rate of your existing French mortgage is 1% higher than the new rate you are offered; - You are closer to the beginning than the end of your mortgage term - Your outstanding balance is above €200,000
3. Remortgage to raise capital. If you have equity in your French property home, borrowing against your French property can be a very effective way of raising capital, to create a portfolio, finance renovation work, or repay existing debts denominated in USD or GPB
4. Remortgage to switch to a fixed rate loan. The present low rate environment can be a perfect time to move from a tracker to a long term fixed rate mortgage.
If you would like advice on how to refinance your French mortgage, please get in touch.